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Last month, new life was breathed into an effort to bring back some popular small business lending provisions that expired shortly before the 2012 presidential election. These expired programs enabled a record number of small businesses to refinance commercial mortgages. The renewed push to reinstate the programs, along with some additional policy changes, can go a long way toward aiding Main Street’s recovery. President Obama has done a number of positive things to help the small business sector. Business startups are up 8 percent from 2009 to 2011, and U.S. Small Business Administration loan processing reforms helped increase the number of small businesses that received financing in recent years. But more can be done, and Congress has stepped up recently. In March, House and Senate lawmakers introduced legislation to revitalize several successful programs from the Small Business Jobs Act of 2010 which expired just as they were gaining momentum. U.S. Senator Mary L. Landrieu (D-LA) recently introduced legislation (S.289) called the Commercial Real Estate and Economic Development (CREED) Act. In addition to Landrieu, Sen. Jeanne Shaheen (D-NH), Sen. Clair McCaskill (D-MO) and Sen. Johnny Isakson (R-GA) are co-sponsors of the CREED Act. Rep. Judy Chu (D-CA) and Rep. Tom Petri (R-WI) announced support as well. Rep. Chu introduced a House version of the CREED Act, H.R. 1240. By expanding some SBA programs and loosening restrictions on others, capital flow to entrepreneurs can be increased. Here's what I believe needs to be done:
1. Bring back successful refinancing programs. In 2010, the SBA created two temporary programs that enabled existing small businesses to refinance conventional loans at low rates. Such loans reduce mortgage interest burdens on business owners, helping to stimulate the economy. The First Mortgage Lien Pool (FMLP) program and the refinance provision for the SBA 504 program were both wildly successful and zero-subsidy, but they expired in September 2012 even though allocation limits were never within reach. (Borrower and lender fees were slightly increased to offset any projected future losses in the program.) Bringing back these loan programs for another two years would greatly benefit entrepreneurs nationwide by offering access to much needed credit and growth capital. It’s important to note that since these programs are not funded by the government, they have negligible impact on the federal budget. Furthermore, funds for these kinds of loans were never used before the programs expired, essentially leaving $15 billion “on the table” that could have been used by entrepreneurs. Reauthorizing these programs for a longer term, for example five years or until the authorized funds are spent, could represent an even better option. 2. Enable some small business lenders to expand. Currently, the Certified Development Companies (CDCs) that administer the federal portion of SBA 504 loans are limited to very specific geographies. This has led to a concentration of lending expertise in a few major market areas while leaving other areas underserved. Relaxing the geographic restrictions and enable qualified CDCs to expand into underrepresented areas. By allowing a free-market approach to flourish, more options -- and ultimately more loans -- will be available to more small business owners. 3. Enable some lenders to help collect on delinquencies. Recent reports show that the SBA walked away from nearly $2 billion in just small business commercial property loans in recent years – despite having alternative methods to try to cut down on delinquencies. Accredited CDC Liquidators can assist with recovery efforts at levels similar to private sector collection agencies. The Obama administration should work with the SBA to help lenders better police loan delinquencies in their own backyards. Better collections equals more loans in the future to more small business owners. It’s possible and practical. By taking the steps above, lawmakers have a unique opportunity to enable entrepreneurs to get financing. The SBA 504 loan program is a proven job creator – at a negligible cost to taxpayers. Simple reforms can go a long way to helping our country’s small business owners get the type of financing that will help them continue growing the economy. If you want to help the cause, contact your representative and senator and ask them to support the CREED Act.

Courtesy of YEC

Christopher G. Hurn is the co-founder and CEO of Mercantile Capital Corporation in Orlando, Fla., a nationwide provider of small business real estate loans and interim financing. He recently authored The Entrepreneur’s Secret to Creating Wealth, available at bookstores and online. For more information on MCC or SBA 504 loans contact Hurn at 1-866-622-4504 or visit www.504experts.com.

Courtesy of YEC

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.